"Boss, You Need to Get Mandatory Insurance"... Kakao and Naver Friendlier Than Insurance Companies (Comprehensive)

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[Asia Economy Reporter Oh Hyung-gil] As big tech companies accelerate their entry into the insurance industry, they are launching new services one after another. It is characteristic that they boldly choose methods different from traditional insurers, leveraging the market dominance based on large platforms with many customers. Experts advise that while insurers compete through digital innovation, they should also refer to big tech business models to create new revenue bases.

According to the industry on the 22nd, Kakao Pay recently applied to financial authorities for the main license of a digital non-life insurance company called ‘Kakao Pay Insurance.’ They plan to offer insurance services linked to the platforms owned by Kakao.

It is known that they are planning taxi, bike, and designated driver insurance linked with Kakao Mobility, and return shipping insurance linked with Kakao Commerce. In the early stages of the business, they plan to focus on small, short-term insurance closely related to daily life, and later expand their portfolio to full-scale long-term insurance such as mobility (auto insurance) and health insurance.

Since they have directly entered the insurance business rather than partnering with insurers, the differentiation from existing insurers is a key point that will determine whether they settle in the early market. The insurance industry expects significant influence in insurance sales due to their platform roots, but sees risk management such as claims adjustment and loss ratio as crucial.

Naver Financial chose insurance brokerage by registering an insurance agency (GA) corporation under the name ‘NF Insurance Service’ with the court in June last year.

In particular, the recently launched insurance service for small and medium-sized business owners, ‘Boss’s Mandatory Insurance Guide,’ is receiving great response from businesses that use Naver as a sales channel. The Boss’s Insurance Guide, launched in November last year, saw visitors from small business owners surge from about 10,000 per month in early this year to 345,000 per month in November.

It is characterized by simple and clear explanations about insurance that business owners are required to subscribe to, such as personal information protection, disaster liability, and fire insurance. Although these products have already been sold by insurers, business owners had to individually search public institution websites for insurance necessary for their business or industry.

On the other hand, Naver performs a new role as a sales channel by clearly informing key information such as mandatory subscription targets, penalties for non-subscription, and premiums. Currently, it links sales of products from four companies including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and Heungkuk Fire & Marine Insurance, but the possibility of expansion is open.

Hwang In-chang, a research fellow at the Korea Insurance Research Institute, said, "If big tech companies obtain insurance company licenses and enter the insurance business, they can develop and sell new products or services using data and technology, potentially causing insurers’ potential customers, especially the MZ generation (Millennials + Generation Z), to defect. Even in cases of partnership sales, they will hold superior market dominance," adding, "Insurers should strengthen customer contact points, build partnerships with IT companies, and foster digital finance talent."

This content was produced with the assistance of AI translation services.